Academic journal article Academy of Accounting and Financial Studies Journal

An Empirical Study about the Degree of Coincidence of Local Government Financial Reporting in the USA and Spain with the IPSAS of the IFAC

Academic journal article Academy of Accounting and Financial Studies Journal

An Empirical Study about the Degree of Coincidence of Local Government Financial Reporting in the USA and Spain with the IPSAS of the IFAC

Article excerpt


The IFAC is submitting a coherent set of International Public Sector Accounting Standards (IPSAS) to assist governments in the preparation of their financial reports on the accrual basis.

In 1999, the GASB established a new framework for the financial reports of USA state and local governments. This new framework represents an important change in the governmental accounting. In Spain, Local Government Accounting is pending to adapt its Chart of Accounts to the Public Sector Chart of Accounts of 1994. The USA and Spain represent two different accounting cultures: the Anglo-Saxon and the European Continental, so the study of differences and similarities between them and with respect to IPSAS, will be useful to better understand the evolution of the implementation of GAAP in local governmental accounting.

The aims of this paper are to carry out an empirical study on the degree of coincidence between the governmental accounting practices in accrual accounting recommended by the IPSAS and the information required by the GASB 34 and Spanish local government accounting, and to study the relationship between the general objectives of governmental accounting and the disclosure of information in the financial report of the local governments of the USA, Spain and the IPSAS.


Throughout the nineties, important reforms in governmental accounting systems have been carried out internationally in order to improve the disclosure of information for external and internal purposes. Currently, the generic objectives of public sector accounting are accountability and the provision of useful information to guide the decision making process of every potential user interested in the res publica.

In a broad sense, the public sector is being subjected to transformation in order to enhance the efficiency, effectiveness and accountability of public service delivery (OECD 1993, 1994). These reforms have resulted in a wide range of changes such as deregulation, decentralisation and externalisation. Hood (1995); Olsen and Peters (1996); Gray and Jenkins (1995), describe the main features of the transformation carried out in government organisations, known generally as New Public Management (NPM), which includes the replacement of input control by output control, management by results, the assignment of responsibilities and the introduction of private sector management techniques (Hood, 1995). NPM is an overall label for public management systems based on the technologies and technical practices of customer-oriented mechanisms, financial reporting based on accrual accounting principles (e.g. income-statement), performance measurements (e.g. performance indicators), delegation (e.g. delegation of budgets) and performance auditing (Guthrie, Olson and Humphrey, 1997).

NPM has resulted in all sorts of things, including: less interventionist, improved public sector efficiency and effectiveness; greater public service responsiveness and accountability to consumers and citizens; increased choice between public and private providers of public services; and better economic performance. (Guthrie et al, 1999)

The recommendations for change came from the belief in the value of adopting private sector management and accounting practices in public services (Guthrie, 1998), an adoption process encouraged and facilitated by the growing ranks of public sector managers and the increasing numbers of business school students employed in public sector organisations (Pusey, 1991) and company-isation (Brunsson, 1994). All these have been used to demonstrate the growing influence of private sector methods (Boston et al, 1996).

The aim of public sector reforms is to break down bureaucracy (Barzelay, 1992) so that managers can carry out a more efficient use of limited resources. Governmental accounting is considered as an integral part of the public sector reforms (Norman, 1995) and a highly beneficial to them. …

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